Under the proposals of open up the market, firms will have to share bus stations with rivals and accept "multi-operator ticketing schemes".

They will also prevented from taking direct measures to keep out new rivals, such as over-bussing - where a firm increases the frequency of its service to kill off a competitor.

Jeremy Peat, chairman of the local bus market investigation group, said: "Competition and potential competition can drive standards up for passengers —that was the intention behind deregulation ... but the reality is that in too many areas of the country, competition has stagnated and the incumbent providers know that they face little in the way of serious challenge."

"Operator behaviour" has been blamed in the report for keeping rivals out.

Out of the 1,245 bus companies operating in England, Scotland and Wales, five big operators - Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach - carry 70pc of all the 2.9bn passengers a year.

Bus services were first deregulated 25 years ago, with the exception of London and Northern Ireland.